Key Takeaways
What caused the USDX crash?
On-chain investigators linked USDX founder Flex Yang’s wallet to addresses that drained USDC, USD1, and USDT liquidity using USDX as collateral.
How did lending protocols respond?
Lista DAO passed emergency proposal LIP022 with overwhelming support, triggering liquidation proceedings that are now nearly complete.
USDX collapsed today, dropping from $1 to $0.37 in a dramatic 63% crash. Traders accused Stables Labs founder Flex Yang of draining liquidity from major DeFi protocols, sparking panic across the market.
Source: CoinGecko
The stablecoin hit bottom around 4:15 PM GMT on 6 November. It briefly touched $0.37 before climbing back to $0.70, according to CoinGecko data. The token should trade at $1.
USDX founder accused of foul play
The trouble started early on 5 November. A crypto analyst on X posted findings that linked Flex Yang’s, the founder’s, wallet to addresses draining USDC, USD1, and USDT liquidity.
The wallets used sUSDX and USDX as collateral across three protocols: Euler, Lista, and Silo.
“Someone drained all USDC / USD1 / USDT liquidity using sUSDX / USDX as collateral,” Arabe Bluechip wrote. “They’re paying 100% borrow interest with no intent to repay.”
The analyst questioned the strategy. Why borrow against USDX while burning 100% interest? Why not just redeem for USDT?
Protocol responds
Lista DAO confirmed the crisis at 9:23 AM GMT on 6 November. The lending protocol said it had been monitoring MEV Capital’s USDT Vault and Re7 Labs’ USD1 Vault.
Source: X
Both vaults showed collateral facing “abnormally high borrowing rates without repayment activity.”
Lista pushed MEV Capital and Re7 Labs to act. “Take immediate responsibility,” the protocol demanded. “Finalize decisions, communicate transparently, and work with us to protect users.”
Emergency action
Lista DAO called an emergency vote. The community passed proposal LIP022 with overwhelming support. The protocol moved fast to liquidate positions and protect users.
Lista later confirmed that liquidation was “nearly complete.” Re7 Labs cooperated, taking “proactive steps in users’ best interest.” The protocol cut the USDX/USD1 market interest rate to 3%. Any remaining positions were moved to a public liquidation pool.
What it means
Trading volume for USDX exploded during the crisis. The token swung wildly throughout the day. This depeg ranks among 2025’s worst stablecoin failures. It raises serious questions about collateral management in DeFi.
According to a report from Rise, there have been over nine stablecoins depeg events in 2025. However, they were resolved within hours; the deviation was over 1%.
Stables Labs has stayed silent. The company hasn’t addressed the allegations or explained the depeg.
The DeFi community awaits answers regarding the liquidity drainage and recovery plans for affected users.
The situation continues to develop.
